Moody’s Investors Service late Monday downgraded the general obligation bond rating of Suffolk County, N.Y., to A1 from Aa2 with a negative outlook.
The move comes less than a week after the eastern Long Island county declared a fiscal emergency after a budget task force projected a $530 million deficit over three years.
It’s the latest rating agency action against the county. Fitch Ratings in late November assigned a negative outlook to Suffolk’s GO public improvement bonds and tax anticipation notes, while saying last week it would monitor the most recent developments.
Moody’s last fall dropped to MIG-2 from MIG-1 the county’s $120 million of Series I 2011 Tans that mature in September.
“The downgrade and negative outlook reflects sharply narrowed liquidity after recurring operating deficits have significantly reduced reserve levels,” Moody’s said in the Monday report.
The county continues to face a structural operating gap in the current fiscal year, necessitating significant midyear budget adjustments.
County Executive Steve Bellone declared a fiscal emergency after the task force released its report. The move enables him to impound 10% of funds from all county departments and fast-tracked the sale of $90 million in revenue anticipation notes.
The task force, chaired by Richard Halverson, who helped steer New York City’s recovery in the 1970s, identified several problem areas, including soaring pension costs, excessive dependence on sales tax revenue, a slow recovery on Long Island, use of reserves and overreliance on stop-gap measures.
